BOV Chair comments on HSBC exit: ‘The sooner the better’

Questions surrounding HSBC’s future in Malta should be resolved quickly to allow the banking sector’s development into an “orderly, competitive market”, according to BOV Chairperson Gordon Cordina.

“From our perspective, the sooner this matter is got to a conclusion, in a way which helps the reputation of the financial sector and of the country, the better it is for the economy and by association for this bank,” he said during the presentation of BOV’s interim results, in which he also discussed Malta’s growing public debt and the bank’s investment in AI.

BOV and HSBC Malta are the country’s largest and second-largest banks, respectively.

In September 2024, HSBC confirmed that it is looking to exit the Maltese market, in line with a shift in focus towards Asia that has seen it get rid of its Brazilian and Russian operations, exit the US mass-market retail banking business, and sell its French and Canadian retail banking businesses.

Over 10 months have passed since that announcement, but the process is seemingly far from over. Several bidders, including APS Bank and Hungary’s OTP Bank, have fallen by the wayside, leaving Ardshinbank and Bank of Georgia as the frontrunners.

Ardshinbank and Bank of Georgia are the leading financial institutions in Armenia and Georgia, respectively.

Asked whether BOV is affected by the ongoing sale of HSBC Malta, Dr Cordina said the bank does not want to be “excessively dominant” in the market.

“We want to compete,” he said, pointing to BOV’s investment in its digital capacity, including AI, “because we know that in two or three years’ time that will be the way to win the competition.”

Earlier this year, BOV announced a strategic partnership with Microsoft to deploy the US tech giant’s suite of digital and AI tools across its operations.

BOV CEO Kenneth Farrugia said the bank’s utilisation of these tools is still in its initial stages. While BOV’s investment in AI is until now “not material”, it will “definitely increase” in the coming years, he said.

The bank has nonetheless increased its hiring of data scientists, said Chief Strategy, Transformation and Data Officer Ivo Camilleri. He emphasised that any use of AI will be conducted with a “strong risk management approach,” in line with regulations like the AI Act.

One area where BOV has been at the forefront of AI deployment has been in its transaction monitoring system, by Resistant AI.

Group Chief Anti Financial Crime Officer Ryan Caruana noted that BOV was the first bank in Malta to use pre-transaction monitoring on live payments, allowing it to stop €1.6 million of fraudulent transactions from going through in just six months.